Sin Tax – The Price Of Guilty Pleasures

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We all have some guilty pleasures right? I mean, who doesn’t? My guilty pleasure is enjoying a nice micro-brew from many different places. I love finding a great beer and enjoying it with friends. Heck, I even brew my own beer and have for years. There is nothing better than cracking open an ice-cold homemade beer that you put your pride and joy into making. I am getting a little thirsty now just thinking about it. I guess it is time to create a new batch!

The Sin Tax

Have you ever heard of the sin tax before? I have spoken to many people about this and many don’t even know what it is. The reason why is because most sin taxes are already incorporated into the price of some of the most popular guilty pleasures. Alcohol, Tobacco, and Gambling are three of the biggest products with sin taxes. The sin tax is one that is levied on a range of products that are deemed undesirable by society. The federal and state governments tax such products to make it less attractive to the consumer. While I understand the tax, I don’t think it has really worked, especially with alcohol and tobacco. The government gets a good amount of revenue from the sale of these products, but they are still extremely popular.

I was made aware of the following infographic that was created by accountingschoolguide.com. They put together a great piece about sin taxes. Since I love infographics, I just had to post it for your consumption. Don’t worry though, I won’t tax you to look it over. I don’t have that type of authority!

I hope you enjoy it and let me know what you think of the sin tax. Does anything in this infographic surprise you?

About Grayson Bell

I'm a business owner, blogger, father, and husband. I used credit cards too much and found myself in over $75,000 in debt ($50,000 in just credit cards). I paid it off, started this blog, and my financial life has changed. I now talk about fighting debt and growing wealth here. I run a WordPress support company to help business owners and bloggers who use WordPress get around tech challenges.

Reader Interactions

Comments

I can’t say I see this as a bad thing. If I was the government and had to decide between placing a 100% tax on something like smoking which causes a huge amount of spending through public healthcare, compared to increasing income tax by 0.1%, I would make exactly the same decision.

I know the sin tax all too well. Here in Canada the taxes on alcohol and tobacco are very high. I don’t smoke and don’t drink all that much but it hurts a little to see the prices so much lower just across the border. But I guess this is a good thing, it discourages people from drinking/smoking and it also brings in a large tax income to the government.

I don’t know if they will go up with Obamacare because the increase can only go so much before demand stops. Since private companies are selling these items, they would react with bringing the price back down.

Canada is big on SIN taxes except for gambling. There is a 50 million dollar lottery draw this Friday night and the winner gets the entire thing. No taxes. No taxes on casino wins either. The government controls most of the gambling and they take their profits off the top of sales and don’t tax winners.

Smokes cost a fortune but you can just buy them tax free on every Indian reserve.

I’ll take a Pigovian Tax over an outright ban any day. From a policy perspective, the problem is determining how much. Do you base it relative to how much we expect that activity to cost society (from things like lost wages, medical bills, or direct damage from, for example, drunk driving)? Base it on how many people you’d like to convince to quit?

Interesting stuff, Grayson! I’ve never smoked, in fact I don’t even drink anymore, but I am amazed that cigarettes cost upwards of $7 a pack here now! And it seems even higher elsewhere! I have family members that easily smoke 2 packs a day, and it makes me cringe thinking that they’re throwing close to $500 a month away with that habit. Yikes!

Now this is a new concept to me but I love the idea! I know that socially-damaging goods cost more but it’s more elegant to simply call it the sin tax affect. And yes, I agree that it hardly makes a difference because people actually get addicted to these products and don’t care much for the price. One question though – sins are associated with the devil, so any money made off the tax goes to … the government. Makes good sense 🙂

I wonder how much more money people would spend on these “sins” if they weren’t taxed. I have never been in the habit of smoking or even drinking very much (though I do enjoy a cold one every once in awhile) so I’m not so sure. I would rather the government tax these things than necessities like food.

I’m a drinker but I’m sure there are plenty of non-drinkers who think excise taxes aren’t high enough on alcohol. I have noticed anecdotally that my state (NY) is significantly cheaper for booze than PA and NJ so that must be a difference on the per gallon charges.

I also agree with Tushar that even as someone who enjoys the occasional beer, it’s better to tax the alcohol than food. I find it crazy when I’m in a state that has sales tax on things like produce!

I’d be more comfortable with the government levying random taxes on products if I had more confidence in the money actually being spent responsibly in a manner that is related to the product being taxed.

Giving the government $33B a year to spend however they see fit is how we end up with results like the healthcare.gov website.

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Thanks for visiting Debt Roundup. I built this site to share the journey I took to get out of nearly $75,000 in debt. I share tips about debt, making money, saving money, investing, and much more. Take some time to learn more about me.

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